A Look at the Law
The Public Legal Education Association of Saskatchewan (PLEA) is a non-profit corporation, non-government organization that provides the people of Saskatchewan with understandable, useful information and education on our laws and legal system.

Provincial Sales Tax & Used Goods
November 28, 2004

In Saskatchewan , a number of taxes are in place to ensure that the province is able to fund public services either, in whole or in part, that fall under provincial jurisdiction. These public services include things like public heath care and education. The Saskatchewan Department of Finance is responsible for administering the various provincial taxes, which include personal income tax, provincial sales tax (PST), tobacco tax, fuel tax and liquor consumption tax.

Provincial Sales Tax (PST) is a 7% tax that is applied to the purchase, importation or rental of certain goods and services. Generally speaking, PST is applied to the purchase or rental of new or used personal property and a variety of services. Services that are subject to PST include telephone and television services, general repairs and installations, cleaning services, legal services, accounting services, architectural services and veterinarian services. Goods such as food, reading materials, prescription drugs and medicine, agricultural equipment and most children’s clothing and footwear is exempt from PST.

For many Saskatchewan consumers, the taxation of used goods is one of the more confusing aspects of the provincial sales tax plan. This confusion is sometimes related to the mistaken belief that once tax has been paid on an item, the tax should be considered paid. But in fact, whether used items are subject to sales tax is a matter of government policy and not any universal taxation principle. So the reality is that the Saskatchewan sales tax regime currently includes the taxation of used goods. The tax that is collected from the sale of used goods, along with provincial sales tax collected on other goods and services is used for the raising of general revenue for the province.

When an individual buys used personal goods - other than a vehicle - PST applies to the selling price of the goods less a deduction of $300 per item. Both the PST and the deduction apply whether the goods are bought from another individual or from a business. In situations where one item is traded-in for another, PST applies but the purchaser is entitled to the $300 deduction or the value of the trade-in, whichever is the greater.

PST is applied a little differently to the purchase of new and used vehicles. When a used vehicle is purchased privately, consumers are generally allowed a $3,000 deduction from the purchase price, or the trade-in value, whichever is greater. In the case of private sales, the purchase price is deemed to be the purchase price or the vehicles’ Red Book value, whichever is the greater, unless Saskatchewan Finance receives acceptable proof of the actual purchase price. When a trade-in is involved, the tax is based on the cash difference between the price of the car and the value of the trade-in. When a used vehicle is purchased from a dealer the $3000 deduction does not apply.

PST is not applied to gifts of vehicles, leisure equipment and low-value transactions between close family members (spouse, parent, step-parent, child, step-child, brother, sister, step-brother, step-sister, grandparent, step-grandparent, grandchild, step-grandchild, in-laws, etc.)

This article is intended to be general information only. People who need specific advice should see a lawyer.

For general legal information on other areas of the law, contact Public Legal Education Association, 300 – 201 21st Street East, Saskatoon, Saskatchewan S7K 0B8, Phone: (306) 653-1868, E-mail: plea@plea.org or see our web site at www.plea.org.